The (AIRCO) Advisor

Inflatable Industry News You Can Use!

Making Money with Bouncers

At Hullaballoo, we got into the business the same way most people did- we rented one for a party! It seemed like such a great idea, we decided to start our own. The limited information on the web (or anywhere else at that time) led us to detail the basics in the Startup Guide. We started selling bounces as well for one of the highest quality manufacturers in the business and have helped launch hundreds of new moonwalk businesses.

The industry has dramatically changed in the past few years; prices for moonwalks have dropped and more competitors entering the market have caused regional rental rates to drop as well and this is an alarming trend. The mushrooming growth of the business has thrown off the risk balance of the major underwriters who were working with our industry, causing insurance to skyrocket and many companies to decide to go without insurance at all.

Today's "Profitability" article takes a look at an average bouncer business using average rental rates- you may be shocked. It's a wakeup call for all of us in the industry to take a look at what we are charging and why.

Association of Inflatable Rental Company Operators

The second article announces the tentative formation of the Association of Inflatable Rental Company Operators (AIRCO). AIRCO is being established to help new and existing companies be aware of and achieve safety goals, compile some much needed research for the industry, and reward safe operators with the availability of affordable insurance.

Read on for more information and join us at the Moonwalk Forum for some frank discussion of the issues raised and to let us know what you think.

Learn Web Marketing at IAPPA

Web Marketing Seminar

Are you curious as to why your website doesn't rank well with the search engines? Do you wonder why you aren't getting more e-mail or web inquiries?

Hullaballoo is sponsoring the Web Marketing Seminar the day before the IAPPA showfloor opens- Tuesday, November 16.

Learn web marketing the right way. The all-day seminar is a fraction of the cost of the industry search engine marketing events and designed for business owners, not tech-heads. Learn techniques you can implement to get more impact from your website.

The Early Bird Registration Fee is only $249- the full amount is $299 if you wait too long. Your fee covers breakfast, lunch, snacks and a take home workbook. Join us for this informative workshop and maximize your web marketing efforts.

Going to IAPPA? Stay with Us!

Hullaballoo has reserved a block of rooms at the lovely Radission Barcelo resort located less than a mile from the Convention Center where IAPPA is going to be held. Rooms run $59 a night for standard or $79 a night for deluxe rooms.

Enjoy networking opporunities and meet other inflatable rental company operators by staying at the same hotel. IAPPA is a huge event for all types of amusemsent companies- we rental operators can get lost in the shuffle!

Staying at the Radission will be convenient if you plan to attend the AIRCO reception on Tuesday night AND you can avoid the parking fees at the convention center by taking the convenient shuttle to and from IAPPA.

Book early! Because of the popularity of this hotel and the number of people attending IAPPA, we can't hold these rooms for long and will have to release them in a few weeks. To ensure getting the room of your choice, book your reservation now.

A Hard Look at the Profitability of the Bouncer Business

By Scottie Claiborne ©2004

Many manufacturer websites tout the ease and profitability of starting your own bouncer business. Parents who've rented a bouncer think it seems like an easy way to make some extra cash. It sounds like a good idea too. You start to calculate in your mind, if I had 5 bouncers, I'd have an extra $500 a week in cash!

But a bouncer business is a BUSINESS first and there are costs many people don't take into account. Let's take a closer look at the small backyard bouncer business.

Sam has $10,000 worth of credit on his personal credit card, so he buys 4 bouncers to start off his business. He buys a trailer and a hand truck, takes out an ad in the yellow pages at $100 a month, sets up a web site and buys some business cards to hand out. After investing in carpet remnants, cleaners, extra towels, and various odds and ends he'll need including business and rezoning licenses for his house, he's invested the entire $10,000 into his business.



Bouncers	$ 7,200.00
Shipping	$ 300.00
Supplies	$ 300.00
Trailer	$ 600.00
Website	$ 1,000.00
Hand Truck	$ 100.00
Misc	$ 500.00
	$10,000.00

He forgot to factor insurance into his plan… so after much calling and waiting and many quotes he finds a policy for $4000. He's pretty lucky at this point in the game to have gotten it.

So, he sets out on his first setup. It's not as easy as it looked- he struggles with issues that never occurred to him to think about. Narrow gateways, sloped yards, fire ants and dog poo, clients that argue over safety issues, and always, the weather! It is more physical than he imagined as well- he's exhausted.

He adjusts to the issues and is still pleased with his business, after all, he's putting an extra $350-$500 a week in the bank and that feels good. People are referring him business but he'd like to have all the units out each weekend. He invests in a postcard direct mailing and gets a great response. He's busy all the time! He wonders how long his back will hold out- so when a neighbor's kid offers to work for him, he offers him $25 per setup. He figures that's what he's paying himself as well, even if he doesn't actually see it in his hand.

At the end of the season, he relaxes and looks at his bank account, expecting to feel a sense of fulfillment only to be amazed at how little money is there. What happened to all that work? Where did the money go?

Let's take a look. Sam's season, realistically, is about 36 weeks. He charges $125 for all day. He had 118 rentals this season:



Bouncer 1	$ 125.00	36	$ 4,500.00
Bouncer 2	$ 125.00	34	$ 4,250.00
Bouncer 3	$ 125.00	28	$ 3,500.00
Bouncer 4	$ 125.00	20	$ 2,500.00
		118	$14,750.00

So far, so good! Nearly $15,000 is a good part time income for warm weekends. But then he pulls out his expenses and is shocked to see how the little things add up:



Yellow Pages	$ 1,200.00
Postcards	$ 500.00
Insurance	$ 4,000.00
Labor	$ 2,950.00
Gas and Vehicle	$ 590.00
Taxes .08	$ 1,180.00
Printing & Postage	$ 118.00
Misc Supplies	$ 300.00
	$10,838.00

His actual profit for the year was: $3912. He shakes his head in disbelief. He worked heavy labor for 8 months for less than $4000? He suspects gas and additional maintenance on his vehicle cost more than his estimate of $5 per delivery as well. Half of the labor charges were to himself, but still, he didn't get into the business to make $100 a day setting up and tearing down 4 moonwalks. Gritting his teeth, he estimates he put in about 10 hours a week, so he's looking at an investment of 3600 hours of his time. And he'll have to pay income taxes on that amount, bringing his real earnings to around $3000. He hasn't even paid off his initial $10,000 investment yet.

He quickly runs the numbers on his competitor who only charges $100 a bounce rental and is shocked- he wonders if the guy realizes he only netted $1198 which amounts to less than $1000 after income taxes. He suspects his competitor isn't insured, saving him about $4000, but it's still a lot of work for $5000 a year!

Sam's wife looks over his shoulder and asks where he accounted for all the hours she put in on the phone and printing rental agreements for him. He shakes his head, realizing he hasn't even accounted for office staff. She figures if she had been paid minimum wage, she ought to have been paid about $2500, at the minimum. And she's not including the time she put into the accounting.

His bottom line is about $500. He is totally crushed. And his insurance renewal fee is going up. His wife is upset that they never do anything together on the weekend anymore. At that profit level, it will take him years just to pay off his initial investment. He thinks he should sell his inventory for $5000 and cut his losses.

On a whim, he decides to see what would happen if he raised his prices to $150 a day. Including paying his wife $2500 a year for answering the phone (which is really not enough), his net before income taxes is $4126. Definitely better-and he does enjoy the business. He also decides to look at the numbers if he adds a slide or other higher-income item to the mix. He'll call his insurer first so that he can factor in the increased insurance and see if it's worth it to put more money and effort into the business, or to take back his weekends and move on.

Small bouncer businesses are costing many owners more than they are taking in- but most people don't realize it. I would urge anyone who is considering starting a bouncer business, particularly in high competition areas, to take a realistic look at the figures before calling your favorite manufacturer and handing over your credit card. If you are in an area where you cannot charge any more than $100 per rental, it's highly unlikely that you can be profitable with just a few bouncers.

If you think you can get into the business and build your clientele by charging less than your competitors- think twice. You will be working every bit as hard as they do, for less money. It takes just as much time to talk on the phone, prepare rental agreements, travel, set up and take down a bounce for $100 as it does for $150. You just make $50 less.

If you feel you have to drop prices to meet competitors- consider your actions very carefully. If you book fewer rentals, sure you make less. But you also work less and put less wear and tear on your units and your vehicle. With gas costs continuing to go up, that's not a small amount. Do you really want to work for less? Is it worth it to you?

As a part-time income generator bounces don't make a lot of sense anymore, if they ever did. It's a business and there are fixed costs associated with running a business, both in time and money. If you aren't prepared to become a large operator with a lot of bounces and a staff OR add higher income-generating inflatables to your inventory (along with the higher insurance and setup costs), take a hard look at how much revenue you'll really be taking in for your efforts. Owning your own business is a lifestyle choice, but it needs to ultimately be profitable for you.

Want to discuss this article? Talk about it at the forum.

Association of Inflatable Rental Companies (AIRCO)

Working together to advance our industry into a profitable and safe one is something we should all be focusing on. We are looking at starting a non-profit trade association to promote the inflatable rental industry as a whole.

A secondary goal of AIRCO will be to create a self-insured group to make liability insurance affordable to rental operators. The insurance will have some critical restrictions- unsafe setups will not be covered. This will greatly lower the risk to the group while absolutely requiring each operator to take extra steps to ensure every rental is setup properly and supervisors have the proper instruction.

How affordable is affordable? It depends on how many operators are sharing the cost. The more members we have, the lower the cost to each company. As a non-profit group, we'll be looking to keep costs low and benefits high.

If you are coming to IAPPA, join us for a reception and open meeting to launch AIRCO on Tuesday evening, November 16. If you can't join us in Orlando, sign up for the AIRCO mailing list by sending an e-mail to airco@aweber.com with "subscribe" in the message. The website should be up shortly!

Discuss your thoughts on AIRCO or ask questions at the Moonwalk Forum!

Top Threads at the AIRCO Forum

Copyright Issues
Why is it ok for everyone to have their own version of a castle, but not ok to have your own spongy guy or explorer girl? Interesting discussion on copyrights, trademarks, and patents.

Industry Trade Organizations
IS AIRCO needed or should we all join forces to boost the IIPGA or ROAR? What do you want in an industry trade organization and is it already out there? We'd love to hear your thoughts.